Supply Chain Operations Reference (SCOR)

Model Convergence with Lean and Six Sigma

Using Supply Chain Architecture to Manage Enterprise
Transformation
SCOR

Matthew J. Milas

Converge
LEAN

SIX
SIGMA

 2006 Matthew Milas

Agenda

What is Convergence

How is SCOR Used for Convergence

C
Comparison
i
off M
Methodologies
th d l i

Benefits of Convergence
g

Why Convergence

 2006 Matthew Milas

Integrated Improvement
SCOR, Six Sigma and Lean
SCOR, Six Sigma and Lean aim to improve the
business by optimizing system performance,
reducing variation, and eliminating wasteful
activities.
SCOR

Six Sigma
Y= f (X

Lean

, ... , XN )

Top-Down Analysis
End-to-End View
Optimizing supply-chain
as a whole

Variation reduction
Problem solving methodology
Stability and accuracy

Speed in the value chain

Waste elimination
Value system redesign

 2006 Matthew Milas

Convergence is a Coordinated Approach

SCOR
Combined
Lean 6

SCOR

Business
Strategy
Supply Chain
Benchmarking
Supply Chain
Assessment

Lean Six
Sigma

Value Stream
Value
Stream
Mapping
Mapping

SYNERGISTIC

S
Y
M
B
I
O
T
I
C

Six Sigma Projects

Six
Projects
and Kaizen
and
Kaizen
Bottom-line
Bottom-line
Results
Results

 2006 Matthew Milas

The SCOR Framework

SCOR defines supply chain as the integrated processes of Plan,
Source, Make, Deliver and Return, spanning your suppliers
supplier
li tto your customers
t
customer,
t
aligned
li
d with
ith Operational
O
ti
l
Strategy, Material, Work & Information Flows.

Plan
Plan

Deliver

Suppliers
Supplier

Plan

Source

Make

Plan

Deliver

Source

Make

Deliver

Source

Make

Plan

Deliver

Supplier

YOUR COMPANY

Customer

Internal or External

Return

Internal or External

Source

Customers
Customer

Supply Chain Operations Reference Model

5

 2006 Matthew Milas

What is a Process Reference Model?

Process reference models integrate the well-known concepts of

business process reengineering
reengineering, benchmarking
benchmarking, and process
measurement into a cross-functional framework

Business Process
Reengineering
Capture the as-is
state of a process
and derive the
desired to-be
future state

Benchmarking

Quantify the
operational
performance of
similar companies
and establish
internal targets
based on best-inclass results

Best Practices
Analysis

Process Reference
Model
Capture the as-is state
of a process and derive
the desired to-be
to-be future
state

Characterize the
management
practices and
software solutions
that result in bestin-class
in class
performance

Quantify the operational

performance of similar
companies and establish
internal targets based on
best-in-class results
Characterize the
management
practices and
software
solutions
ft
l ti
that result in best-inclass performance
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 2006 Matthew Milas

SCOR Structure for Convergence

 2006 Matthew Milas

Example SCOR Geo Map Aerospace Mod Kits

Sqdn

Manufacturer
S1, S2, M2, D2

Supplier
Supp
e B

S1, DR1, DR2

S1, DR1, DR2

Sqdn

Supplier A

D2

D1

Supplier C

D2
Sqdn
S1, DR1, DR2

Distribution

S1, D1, DR1, DR2

 2006 Matthew Milas

Example Problem Identification

Delivery
Performance
Goal 90%
Delivery
Performance
Actual - 66%

P
1
Supplier
on time delivery
Actual 95%

P
1

P
3
P
2

D2

S2

D2

S2

D1

S1

P
4

M1

D1

Candidate
for: P
P
4
Level2 3 Process
Review
Kaizen
Lean Event
Six Sigma
S1
D1
Process
Improvement
S1

Suppliers
Manufacturer
Level 1

Distribution center

S
Squadron
d

Level 2

Level 3 SCOR VSM Map

2006 Matthew Milas

S 1.4

Exceeding Requirements
Meeting Requirements

Transfer
Product

Missing Requirements
Unknown

Transportation

Manufacturing

0.5 days

M 2.1

M 2.2

Schedule
Productio
n
Activities

Issue
Sourced /
InProcess
Product

10 days

M 2.3

Produce
and Test

M 2.4

M 2.5

M 2.6

Package

Stage
Finished
Product

Release
Finished
Product
to Deliver

5 days

3 days

1 day

30
days

Sales
D 2.1

D 2.2

Process
Inquiry
and
Quote

Receive,
Configur
e, Enter
and
Validate
Quote

25 days

4 days
10
days

D 2.4

D 2.3
Reserve
Resource
s&
Determin
e Delivery
Date

Consolid
ate
Orders

6 days
15
days

D 2.5

Build
Loads

D 2.6

D 2.7

D 2.8

Route
Shipment
s

Select
Carriers
& Rate
Shipment
s

Receive
Product
from
Source or
Make

15 days
12
days

1 day
5 days

D 2.9

Pick
Product
I
5 days
60
days
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 2006 Matthew Milas

Convergence Implementation Approach

Plan Strategy
& Benchmark

Identify
Opportunities
SCOR

Measure
Improvement
Implement
Solutions

Prioritize
Opportunities
Allocate
Resources

Lean
Six Sigma
Discover
Root Causes

Select
Approach
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 2006 Matthew Milas

Comparison of Methodology Strengths

12

 2006 Matthew Milas

Benefits of Convergence

Standard framework

Systems opportunity identification

S t
System
visibility
i ibilit

13

 2006 Matthew Milas

Benefits of a Standard Framework

Standard process and metrics framework for

organizing enterprise processes and
improvements
Manage processes across enterprise
Common processes across different products,
programs & business units
programs,
Measure, track, categorize, and align operational
improvements
Library of categorized best practices
Cataloging system for process improvement ideas

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 2006 Matthew Milas

Benefits of Opportunity Identification

High-level systems process assessment tool

Identifying, prioritizing, and aligning improvements
Prioritizing
g based on alignment
g
to specific
p
strategies,
g , system
y
impact, focus area, or other criteria

Linking business strategy to improvement efforts

Resource planning and allocation

Strategic competitive assessment and benchmarking

Internal processes across enterprise
External competitive performance with system metrics

15

 2006 Matthew Milas

Benefits of System Visibility

A systems view of processes & performance

Map the whole system to avoid system suboptimization through local optimization
Identify constraints and critical paths to improve
performance
Manage
g multiple projects
j
running
g concurrently
y across
enterprise
Identify high-level improvement disconnects and
opportunities
Collaborate with suppliers and customers to improve
relations

16

 2006 Matthew Milas

Why Convergence

Large companies experience disarray implementing

continuous
ti
iimprovementt
Lack of true leadership and cultural change management
Lack of architecture for managing enterprise transformation

An Imperfect world is the reality, but we must

continue to compete
p

Convergence instills a structured approach that is

more systematic,
y
manageable,
g
and holistic
Mitigates imperfections and augments continuous improvement

Convergence bridges the gap between strategic enterprise

planning, continuous improvement, and transformation
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